September 11, 2011

The fall is off to a decent start with buyers out and about looking for bargains. We’ve noticed a surge in buyer interest after a distinctly lackluster summer. The most noticeable new trend in Marin real estate is the preference for larger Central Marin homes with flat yards and pools as opposed to Southern Marin views.

The biggest statistical change is after weathering the recession better than all Marin towns, Tiburon has had a very difficult year with SFR prices down near 12%– off 27.5% now from peak 2007 prices which is now in line with most other towns in Marin.

The economy continues to be the biggest impediment to RESI real estate sales. During secular downturns like the one we are currently experiencing or like post WWII period and theÂ mid 1970s – early 1980s, the periods of expansions were much shorter than in periods of secular expansions (sourcewikipedia.org). The 4 recessions of 1949-1961 followed on average just 3.5 years after the last recession; the recession of 1973-75 followed just three years after the previous; and the 1981 recession followed just 1 year after the previous. Given the structural (debt) imbalances currently weighing on the US at the personal, municipal, state and national levelâ€”it is highly likely that the this period of expansion is becoming fairly long in the tooth, and given recent economic data regarding employment and stagnating growth combined with falling home prices and rising costs (education, health care, insurance, food, energy/gas etc) it is quite likely that 2012 will see another economic contraction.

How to position yourselves:

Sellers: The effect of the lowest mortgage rates ever (The 10 year interest only is now under 4%) has done very little to add demand to the top half of the market. The market has never been more price dependentâ€”and it is likely heading lower over the coming months. Smart sellers are getting ahead of the market on price.

Buyers: While it is possible, even likely, that home prices will contract further thru the next recession, its isnâ€™t clear that affordability will significantly improve. It is hard to imagine that the appetite for US govt debtâ€”which drives mortgages ratesâ€”will not suffer thru the next recession and that when yields reverse direction it will likely be a sharp and quick uptick in borrowing costs. The key is to take your time and find the right home and then act with convictionâ€”try not to get hung up in marginal costs.

The DuPont Group is having another great year having closedÂ almost $20m in sales year to date– focusing on one client at a time. We’ve foundÂ that in times of market stress that you can’t be all things to everyone– that you have to pick your clients carefully and stay focused on their needs until they’re resolved.